President Joe Biden is no stranger to disappointing economic reports. Early on in his presidency, lackluster job growth made it clear that the Biden Administration’s policy of paying people not to work was resulting in a job market with many vacancies and few takers.
Now, another negative report has come for the administration as GDP growth disappoints by 2 percent. The report comes as a new job report brings additional disappointment, showing the number of people on welfare rose just last week to over 13 million. The GDP shows the health of a nation’s economy, so sluggish growth makes the obvious clear: the US economy isn’t doing well recovering from last year’s COVID-19 shutdowns. Despite this, some Democrats are considering future lockdowns to limit the spread of the Delta variant.
Not surprisingly, inflation is a big part of the problem. The economy grew at a whopping 13 percent pace, but inflation offset nearly half of that increase, bringing the GDP down to its current disappointing level. The problem is being exacerbated by the fact that supply chains have still not fully recovered from last year’s COVID-19 lockdowns. Thus, unexpected constraints have caused the cost of goods and services to rise.
At the same time, the Biden Administration is continuing to hand out free money to people who are unwilling to get back to work and encouraging workers to demand higher pay. While the rising cost of food and housing has led to legitimate demands for higher wages, companies that are forced to pay employees more money will in turn pass the costs on to consumers, leading to additional price increases.
Even some mainstream media pundits are now questioning the Biden Administration’s push to pass a whopping $3.5 trillion “soft infrastructure” package that would dump even more money on an economy that cannot handle the current level of cash circulation.
Optimists are pointing out that there are some positive aspects of the recent GDP report. Personal consumption is up as consumers awash in free COVID-19 money spend their good fortune. However, this is likely to be short-lived once the money runs out. Some say that the current inventory shortage could actually be a boost for future GDP reports. This is true, but many pundits aren’t taking into account the fact that supply chain disruption may not be solved in the next quarter or two. Many countries are re-imposing restrictions as the Delta COVID-19 variant surges. This could spell problems for companies that rely on raw materials from other countries.
What’s more, “transitory” inflation is providing to be not so transitory as the cost of living continues to rise while the government looks for ways to exacerbate rather than solve the problem. The current GDP report may not be the last to disappoint at a time when the Biden Administration struggles to shore up support among voters.
